In December 2022, the U.S. District Court for the Eastern District of Michigan dismissed a putative class action against FCA US LLC on prudential mootness grounds because FCA announced a voluntary safety recall shortly after plaintiffs filed suit. Earlier this year, LG Energy Solution Michigan ("LG") showed, yet again, how a voluntary recall can prove an effective defense to pending litigation.
On November 12, 2021, a consumer plaintiff filed Charlton v. LG Energy Sol. Michigan, Inc., No. 3:21-cv-02142-RBM-JLB (S.D. Cal.), a putative class action against LG in California federal district court, alleging violations of California consumer protection statutes in the marketing and selling of LG Residential Energy Storage Unit batteries.
Nearly a year before the lawsuit, LG announced a voluntary recall of the storage batteries because of the potential to overheat and pose a risk of fire and emission of harmful smoke. Pursuant to the recall, consumers could schedule a free replacement and, in the interim, arrange for modifications to recalled batteries to reduce the risk of overheating. And on November 4, 2021, just a few days before plaintiff filed suit, LG had written advising him of the recall and its continued commitment to the program.
On February 15, 2022, LG filed a motion to dismiss the Charlton suit, arguing among other things, that in light of LG's November 4 letter and public recall, plaintiff's claims were moot and could not satisfy the case and controversy requirements of Article III; and in light of CPSC's approval and continued monitoring of the recall program, plaintiff's claims should be dismissed under the doctrine of prudential mootness. Judge Ruth B. Montenegro agreed, dismissing plaintiff's claims on standing grounds. The Court held that LG had provided a timely response to the plaintiff, had already initiated a recall program monitored by CPSC, and was providing replacement products and renewed warranties to consumers. Because the recall program adequately addressed and remedied any battery defect, there was no live case or controversy and plaintiff had no Article III standing.
In order to save the claims, the Court explained that plaintiff would have needed to allege that the replacement battery was also defective. The plaintiff was not entitled to elect his preferred remedy, and just because LG had not offered him a refund and had yet to replace all the batteries affected by the recall, the Court was not barred from finding plaintiff's claims moot.
The recent ruling in Charlton reinforces the power of a recall to dispense with class action litigation early on in the proceedings. This time, the Court's ruling was based on Article III standing rather than the prudential mootness doctrine, but the result was the same. When considering whether to voluntarily recall a product or considering it as a tool to neutralize the threat of litigation, manufacturers should keep in mind the key features that have swayed recent rulings: a comprehensive scope, quick action, robust consumer notification, and oversight by regulatory authorities.
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